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| Nicola Sturgeon urges Scotland's centre-left to back income tax rises | Nicola Sturgeon urges Scotland's centre-left to back income tax rises |
| (2 months later) | |
| First minister says increases are necessary to protect Scottish public spending from UK government cuts and Brexit fallout | |
| Severin Carrell Scotland editor | |
| Thu 2 Nov 2017 13.29 GMT | |
| Last modified on Thu 2 Nov 2017 15.02 GMT | |
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| Nicola Sturgeon has challenged Scotland’s centre-left parties to back her plans for a “modest” rise in income tax rates for the country’s higher earners to protect public spending. | Nicola Sturgeon has challenged Scotland’s centre-left parties to back her plans for a “modest” rise in income tax rates for the country’s higher earners to protect public spending. |
| The first minister signalled that all those earning above £31,000 a year face tax rises in December’s Scottish budget, with rates for those in higher bands likely to rise by at least 1p, while those earning over £150,000 face a rise of at least 3p to at least 48p. | The first minister signalled that all those earning above £31,000 a year face tax rises in December’s Scottish budget, with rates for those in higher bands likely to rise by at least 1p, while those earning over £150,000 face a rise of at least 3p to at least 48p. |
| Publishing a detailed paper on possible tax options, Sturgeon said tax rises were needed to protect public services because UK government budget cuts and the economic costs of Brexit would “significantly worsen” her government’s finances. | Publishing a detailed paper on possible tax options, Sturgeon said tax rises were needed to protect public services because UK government budget cuts and the economic costs of Brexit would “significantly worsen” her government’s finances. |
| She also acknowledged that the Scottish government was struggling to finance its own election pledges, which include increasing NHS spending to match inflation plus £500m and offering an across-the-board rise in public sector pay. Scotland spends £1,460 more per head on public services than the UK average, funded in part by UK taxpayers. | She also acknowledged that the Scottish government was struggling to finance its own election pledges, which include increasing NHS spending to match inflation plus £500m and offering an across-the-board rise in public sector pay. Scotland spends £1,460 more per head on public services than the UK average, funded in part by UK taxpayers. |
| With consumer inflation rising to 2.9%, pushing up the cost of meeting Sturgeon’s NHS pledge, public sector unions are balloting for strike action to insist on above inflation pay rises of at least 3% - a cost which would exceed the sums raised by Sturgeon’s planned income tax rises. | With consumer inflation rising to 2.9%, pushing up the cost of meeting Sturgeon’s NHS pledge, public sector unions are balloting for strike action to insist on above inflation pay rises of at least 3% - a cost which would exceed the sums raised by Sturgeon’s planned income tax rises. |
| After the 2014 independence referendum, the Scottish parliament won almost complete control over income tax and must now set its own bands and rates. It currently raises about £11.8bn, a third of Holyrood’s spending, and could be entirely redesigned. | After the 2014 independence referendum, the Scottish parliament won almost complete control over income tax and must now set its own bands and rates. It currently raises about £11.8bn, a third of Holyrood’s spending, and could be entirely redesigned. |
| As the leader of a minority government at Holyrood, Sturgeon must win the support of at least one other party, but the three that support higher taxes - Labour, the Lib Dems and the Scottish Greens - are pressing for much higher rates. The Scottish Conservatives are alone in calling for taxes to be cut to match the lower rates in the rest of the UK. | As the leader of a minority government at Holyrood, Sturgeon must win the support of at least one other party, but the three that support higher taxes - Labour, the Lib Dems and the Scottish Greens - are pressing for much higher rates. The Scottish Conservatives are alone in calling for taxes to be cut to match the lower rates in the rest of the UK. |
| Sturgeon said at least one of those parties had to compromise to ensure the budget passed, and that they must accept tax rises needed to be moderate and fair. Her offer was unique in UK politics, she said. | Sturgeon said at least one of those parties had to compromise to ensure the budget passed, and that they must accept tax rises needed to be moderate and fair. Her offer was unique in UK politics, she said. |
| “This is a time for mature, honest collective discussions about whether it is time to ask those who can most afford to do so pay a modest, and I stress a modest, increase to help us collectively provide the services that we all rely on,” she said, calling for dialogue with other party leaders. | “This is a time for mature, honest collective discussions about whether it is time to ask those who can most afford to do so pay a modest, and I stress a modest, increase to help us collectively provide the services that we all rely on,” she said, calling for dialogue with other party leaders. |
| In a dig aimed at Labour, which has insisted on higher taxes while being Holyrood’s third party and at least four years away from power, she said: “Tax policy is not a toy. | In a dig aimed at Labour, which has insisted on higher taxes while being Holyrood’s third party and at least four years away from power, she said: “Tax policy is not a toy. |
| “Some of the debate we have heard from some parties over the last year or so have almost sounded as if ‘because we have these tax powers now, almost like a toy we can play with because we can’. That is not the approach of this government.” | “Some of the debate we have heard from some parties over the last year or so have almost sounded as if ‘because we have these tax powers now, almost like a toy we can play with because we can’. That is not the approach of this government.” |
| In heated exchanges on her proposals at first minister’s questions, Ruth Davidson, the Scottish Tory leader, accused Sturgeon of threatening future economic growth by raising taxes. | In heated exchanges on her proposals at first minister’s questions, Ruth Davidson, the Scottish Tory leader, accused Sturgeon of threatening future economic growth by raising taxes. |
| Jackie Baillie, Scottish Labour’s finance spokeswoman, said the suggested tax changes would raise the prospect of deep cuts because they were too modest. They would raise at most £290m, while the cost of tackling the UK government’s austerity drive in Scotland would be £800m. Sturgeon’s proposals “don’t even come close to closing the gap,” she said. | Jackie Baillie, Scottish Labour’s finance spokeswoman, said the suggested tax changes would raise the prospect of deep cuts because they were too modest. They would raise at most £290m, while the cost of tackling the UK government’s austerity drive in Scotland would be £800m. Sturgeon’s proposals “don’t even come close to closing the gap,” she said. |
| The extent of tax rises in Scotland will hinge in part on budget decisions by the UK chancellor, Phillip Hammond, later this month. If he reduces the forecast cuts and raises public sector pay in England, that would be likely to increase Holyrood’s grant from the Treasury, which still pays for about 60% of Scottish spending. | The extent of tax rises in Scotland will hinge in part on budget decisions by the UK chancellor, Phillip Hammond, later this month. If he reduces the forecast cuts and raises public sector pay in England, that would be likely to increase Holyrood’s grant from the Treasury, which still pays for about 60% of Scottish spending. |
| Holyrood sources say Sturgeon’s dilemma has been worsened by the SNP’s election pledges, which left her with a £600m hole in the budget. That has narrowed after her finance secretary, Derek Mackay, signalled he may scrap plans to cut air passenger duty in Scotland because of a wrangle with the Treasury over EU regulations. | Holyrood sources say Sturgeon’s dilemma has been worsened by the SNP’s election pledges, which left her with a £600m hole in the budget. That has narrowed after her finance secretary, Derek Mackay, signalled he may scrap plans to cut air passenger duty in Scotland because of a wrangle with the Treasury over EU regulations. |
| Even so, her tax options paper set out five scenarios which would raise at most £255m, based on a mid-point estimate that included the likely behavioural impacts of higher taxes These assume the wealthier would move out of Scotland, reduce business growth or change the way they are paid. | Even so, her tax options paper set out five scenarios which would raise at most £255m, based on a mid-point estimate that included the likely behavioural impacts of higher taxes These assume the wealthier would move out of Scotland, reduce business growth or change the way they are paid. |
| The paper estimated Scottish Labour’s current policy to raise basic and higher rates by 1p, with a 50p rate for all those earning over £150,000, would raise about £589m. The Lib Dem proposals would raise £444m and the Scottish Greens £335m. | The paper estimated Scottish Labour’s current policy to raise basic and higher rates by 1p, with a 50p rate for all those earning over £150,000, would raise about £589m. The Lib Dem proposals would raise £444m and the Scottish Greens £335m. |
| Scottish Labour’s leadership battle has also complicated the debate, because party policy may change after the new leader is elected on 18 November. | Scottish Labour’s leadership battle has also complicated the debate, because party policy may change after the new leader is elected on 18 November. |
| Anas Sarwar has demanded a new 50p top rate for all those earning above £100,000 a year, and increases for middle earners to raise £700m extra. His rival Richard Leonard has suggested two new tax bands, at £70,000 and £100,000, without calculating how much they would raise. | Anas Sarwar has demanded a new 50p top rate for all those earning above £100,000 a year, and increases for middle earners to raise £700m extra. His rival Richard Leonard has suggested two new tax bands, at £70,000 and £100,000, without calculating how much they would raise. |
| Scottish politics | |
| Tax and spending | |
| Nicola Sturgeon | |
| Scotland | |
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